Sivasankar Bail- No Predicate Offence Made Out, PMLA Proceedings Not Maintainable: Sr. Adv Jaideep Gupta Tells Kerala High Court

The Kerala High Court on Tuesday heard the bail application filed by IAS M Sivasankar in connection to his alleged involvement in the Kerala Gold Smuggling case. Senior Advocate Jaideep Gupta appearing on behalf of the former Principal Secretary to the Chief Minister of Kerala argued before a Bench of Justice Ashok Menon that no case was made out against Sivasankar. Gupta submitted that whereas Sivasankar was first arrested on the allegation of gold smuggling, the authority, without any basis, now alleged that the proceeds of crime were 'kickbacks' from the LIFE Mission contract in exchange for confidential information about the project. The IAS official was arrested by the Enforcement Directorate on October 28 for offences under Sections 3 and 4 of the Prevention of Money Laundering Act for allegedly assisting Swapna Suresh, the prime accused in the gold smuggling case, to launder the proceeds of the crime. No predicate offence In this context Gupta argued that the 'predicate offence' itself was changed as the authority alleged commission of a completely different offence. "You cannot proceed against a person on the basis of an underlying offence. What is the predicate offence," Gupta rhetorically remarked. Referring to Section 3 of PMLA, Gupta submitted that an offence of money laundering is said to be committed when a person is actually involved in any process or activity connected with the proceeds of crime. Further, he referred to Section 2(u) of the Act which defines 'proceeds of crime' as property derived as a result of criminal activity relating to a 'scheduled offence'. In this backdrop Gupta submitted, "There has to be a predicate offence from which proceeds of crime arise, that money needs to be touched by the accused to be prosecuted". He further argued, "If you don't identify the crime, how do you know it is a 'Scheduled Offence' under the PMLA from which the proceeds of crime came?" No proceeds of crime Gupta further denied ED's allegation that Sivasankar helped Swapna to park the proceeds of crime. He submitted that merely because the two were social acquaintances would not mean that the former helped the latter in committing the offence. ED had alleged that Sivasankar arranged a flat for Swapna to park the proceeds of crime. In this context, it had presented the Whatsapp conversation between Sivasankar and his CA, one Venugopal. Denying the allegations, Gupta submitted that correspondence did not disclose anything suspicious and merely because Sivasankar sought to arrange an accommodation for Swapna, would not mean that the same was to keep the proceeds of crime. He read out an excerpt of the impugned Chat and submitted that there is no economic offence in a friend helping another to look for a house. 'It must be seen that they are socially familiar & this is natural behavior,' Gupta said. Proceedings under PMLA not maintainable Gupta argued that since the ED has failed to define a predicate offence and has been unable to establish Sivasankar's connection with the proceeds of crime, the offence under the Money Laundering Act is not yet complete and the criminal proceedings against him are not maintainable. He submitted that Sivasankar's alleged involvement in the LIFE Mission case was also baseless as that project was a private contract between UAE Red Crescent and Unitac Builders. "How are they saying that a government servant received kickbacks from a private contract?" Gupta remarked. He pointed out that the LIFE Mission project had its own CEO, who was a senior IAS Officer and the project was merely supervised by the Chief Secretary. He further submitted that the contract was awarded after a public tender and all the information pertaining to it was in public domain. "Why would anyone give money for information that is already available in the public domain," Gupta said while denying the allegations of bribery and argued that there are no reasonable grounds to hold Sivasankar responsible for anything. Section 45 manifestly arbitrary Coming to the arguments on point of law, Gupta argued that the twin condition for bail under Section 45 of the PMLA is 'manifestly arbitrary'. He referred to the Supreme Court's verdict in Nikesh Tarachand Shah v. Union of India where it was declared that the provision, insofar as it imposes two further conditions for release on bail, is unconstitutional as it violates Articles 14 and 21 of the Constitution of India. The conditions were that the Public Prosecutor must be given an opportunity to oppose any application for release on bail and the Court must be satisfied, where the Public Prosecutor opposes the application, that there are reasonable grounds for believing that the accused is not guilty of such offence, and that he is not likely to commit any offence while on bail. Gupta submitted that even though the provision was...

Sivasankar Bail- No Predicate Offence Made Out, PMLA Proceedings Not Maintainable: Sr. Adv Jaideep Gupta Tells Kerala High Court

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"If you don't identify the crime, how do you know it is a 'Scheduled Offence' under PMLA from which proceeds of crime came?": Gupta tells High Court

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